Revised Data on Output Up a Bit in 2d Quarter

AP

Published: September 7, 1989

WASHINGTON, Sept. 6—
American workers posted a modest productivity improvement in the second quarter, with significant gains by factory workers leading the way.

In a revised report, the Labor Department said today that nonfarm productivity increased at an annual rate of seven-tenths of 1 percent in the April-to-June period, up from the two-tenths of 1 percent gain reported in preliminary data last month and higher than the 1.3 percent decline in the first quarter.

The department said unit labor costs increased at an annual rate of 4.9 percent in the second quarter, down from the 6.2 percent jump reported for the first quarter. It said the smaller increase still indicated persistent underlying inflation.

Analysts said the small productivity gain was consistent with the recent slowing of the economy. But they added that poor performance in the nonfinancial corporate sector, which includes most service industries, suggested that inflation was still around. Productivity fell in the service industries group, while labor costs rose at an 11.1 percent annual rate.

The second-quarter productivity improvement came as output grew at an annual rate of 2.4 percent and hours worked expanded by 1.7 percent.

Workers in manufacturing posted a productivity gain of 2.9 percent at an annual rate in the second quarter, up from the 2.4 percent increase reported in the preliminary data.

The Labor Department said hourly compensation rose at an annual rate of 5.6 percent in the quarter, but consumer inflation continued to erase the wage gains. Hourly compensation adjusted for inflation fell seven-tenths of 1 percent, the department said.

The preliminary data had put the hourly compensation increase at an annual rate of 5.5 percent and the decline in real wages at nine-tenths of 1 percent. In the first quarter, hourly compensation rose at an annual rate of 4.8 percent and real wages declined six-tenths of 1 percent.

The 2.9 percent annual-rate productivity gain in manufacturing in the second quarter followed a 2.1 percent gain in the January-to-March period. Unit labor costs in manufacturing fell at an annual rate of four-tenths of 1 percent after increasing at an annual rate of 1 percent in the first quarter.

graph of U.S. productivity from '85 to '89 (Source: Bureau of Labor Statistics)